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Entries in globalization (95)

8:54AM

WPR's The New Rules: Obama Must Avoid the 'China Threat' Trap

No credible international affairs specialist would contend that the 2012 presidential election will hinge on U.S. foreign policy, given the state of the U.S. economy and the widespread social anger that one sees bubbling up across the country. What's more, Americans -- if not Beltway partisan pundits -- have achieved a certain sense of consensus on foreign policy under President Barack Obama, whose leadership has displayed a palpable "give them what they want" dynamic that reflects his desire to keep overseas issues on the back burner while he focuses on domestic ones.

Read the entire column at World Politics Review.

9:57AM

WPR's The New Rules: A Look Ahead at the Geography of Global Security

As part of a “big think” forecast project commissioned by an intelligence community sponsor, I’ve begun to think about the future geography of global security. As often with this kind of project, I find myself falling into list-making mode as I contemplate slides for the brief. So here are nine big structural issues that I think any such presentation must include . . .

Read the entire column at World Politics Review.

9:09AM

Time's Battleland: Arab Spring with same impact as "big bang strategy": Islam at war with self - not West

 

Nice piece in the NYT at the end of September pointing out that the primary impact of the Arab Spring is that, in giving people chances to rule themselves and not be subject to dictators, Islamic activists find themselves splintering from within . . .

Read the entire post at Time's Battleland.

12:01AM

WPR's The New Rules: U.S. Resilience Can Rise to Future Threats

Last month I spent a couple of hours on the phone being interviewed for the next iteration of the National Intelligence Council's global futures project. This one imagines the world in 2030, and the interview was part of the organization's early polling process of experts around the world. I've participated similarly in previous iterations, and I've always found the NIC's questions fascinating for how they reveal the group's primary fears about the future.

Read the entire column at World Politics Review.

8:00AM

Chart of the Day: Slowing trade = slowing global economy = slowing globalization

FT story that matches a previous Economist bit about the slowing of traffic through the Suez (HT Dan Hare on latter).

As I've noted here before, the more than 10% drop in 2009 was basically recovered in 2010. For now, the trade growth still forecast through the rest of 2011 is more than twice as high as the 2008 total, but we are headed in the wrong direction.

In releasing these figures, the WTO hinted that the fiscal crisis in Europe is much to blame (uncertainty depresses production depresses trade).

The danger now - again - is that trade protectionism begins to creep back in, especially of the monetary sort, as the BRICS are getting hot under the collar over the hot money pressuring their systems - Brazil especially.

10:40AM

WPR's The New Rules: Time to Worry About Over-Eating, not Over-Population

The real clash of civilizations in the 21st century will be not over religion, but over food. As the emerging East and surging South achieve appreciable amounts of disposable income, they're increasingly taking on a Western-style diet. This bodes poorly for the world on multiple levels, with the most-alarmist Cassandras warning about imminent resource wars. But the more immediate and realistic concern is the resulting health costs, which will inevitably trigger a rule-set clash between nanny-state types hell-bent on "reining in" a number of globalized industries -- agriculture, food and beverages, restaurants, health care and pharmaceuticals -- and those preferring a more free-market/libertarian stance.

Read the entire column at World Politics Review.

8:49AM

WPR's The New Rules: Credit the U.S., Not the U.N., for More Peaceful World

Thanks to the Sept. 11 terrorist attacks and the wars they spawned, many people around the world think they're living through the most dangerous, violent and strategically uncertain period in human history. Well, that simply isn't true, as the most recent Human Security Report from Canada's Simon Fraser University makes clear. Entitled, "The Causes of Peace and the Shrinking Costs of War," the 2009-2010 edition of the annual report marshals a ton of solid data that proves our world is less violent than ever and that it has "become far less insecure over the past 20 years." 

Read the entire column at World Politics Review.

12:25PM

Chart of the Day: globalization's greatest victory

The rise of a global middle class, as depicted by The Economist (HT, Richard Jefferson).

People ask, what did America do for the world? It set the conditions for this to happen - and then it defended that system from those who would do it harm. The US is only world power in history whose primary goal has been the peaceful rise of other great powers through trade and development.

9:27AM

Time's Battleland: Globalization at the barrel of a gun

Careful where you aim that weapon, buddy!

That phrase, with its powerful imagery, was often tossed at me following the publication of my 2004 book, The Pentagon's New Map. In it, I argued that globalization's expansion was, and would continue to be, the primary cause of unrest and conflict in the world, as connectivity - in all its forms - extended itself into the non-integrated regions and triggered rising expectations (as in, "If the Indians and Chinese are getting richer, then why do we continue to submit to this incompetent government that keeps us unduly disconnected from all that opportunity?").

Read the entire post at Time's Battleland.

9:37AM

WPR's The New Rules: The Race for Global Leadership in the Age of Anger 

Ian Bremmer, the founder and head of Eurasia Group (for which I work as an analyst), has argued that we are living in a "G-Zero" world, or one in which there is no genuine great-power leadership. From the perspective of political science, it is hard to disagree, as anyone reading a newspaper these days can attest. Still, the historian in me says this situation cannot last for too long. My reasoning here has nothing to do with the global correlation of military force, since thanks to globalization's emerging middle class, "butter" will inevitably emerge as the winner over "guns." 

Read the entire column at World Politics Review.

10:57AM

Our fiscal failure eventually achieves the global rebalancing sought

FT op-ed by former senior Chinese central bank official.

The big lesson of the past few weeks, he says, is that China must end its dependency on the dollar.

China has run a current account surplus and a capital account surplus almost uninterruptedly for more than two decades. Inevitably this has led to an accumulation of foreign reserves. It is clear, however, that running these surpluses persistently is not in China’s best interests. A developing country, with per capita income ranking below the 100th in the world, lending to the world’s richest country for decades is not reasonable. Even worse is the fact that, as one of the largest foreign direct investment-absorbing countries in the world, China essentially lends money it borrowed at a high cost back to its creditors, by buying US Treasuries, rather than importing goods and services.

Internationalizing the yuan, stimulus packages, letting it rise slowly, bundling up all those bucks in sovereign wealth funds - nothing has really stopped the preciptious accumulation because the government remains committted to keeping the yuan low, seeing in inflation an unacceptable risk.

But by staying so married to the dollar, it runs the same risk extended, as the US will inevitably inflate its way out of a certain amount of its unsustainable debt.

As Yongding puts it, "The longer it continues, the more violent and destructive the final adjustment will be."

Of course, the same holds for the US in this game of chicken.

12:38PM

Leading indicator of India eventually surpassing China as globalization's factory floor

Fabulous Economist story entitled, "India's Guangdong."

Short explanation from me b/c fighting ear infection:

Demographic dividend huge in India, and will stretch deep into mid-century.  China's, by comparison, had heyday from 1980-2010 and now starts slow decline.  China, for example, loses about 1/3 of labor entering workforce over next decade - decline finally set in motion by one-child policy.  India surpasses China in labor around 2030, and has 50% more by 2050.  SE Asia on similar trajectory.

All comes to say: China, as it moves up value chain (all those Foxconn robots!), exports jobs to India and SE Asia - inevitably.  Good and bad thing for China, just like it's been good and bad for US last 30 years.

As I watch this, I keep saying to myself: where is the leading indicator of how India actually gets around to seriously industrializing?

That's why this article so cool:  says Gujarat is the state to watch.  It's India's Guangdong.

So stay tuned.

10:56AM

WPR's The New Rules: U.S. Must Get Back in Touch With Its True Exceptionalism

This month's debt-ceiling deal in Washington did little to quell the growing chorus of complaints around the world concerning America's continued inability to live within its means. As those complaints invariably translate into corporate hedging, government self-defense strategies, credit rating drops -- Standard and Poor's is already in the bag -- and market short-selling, the U.S. will most assuredly be made to feel the world's mounting angst. This is both right and good, even as it is unlikely to change our path anytime soon: Until some internal political rebalancing occurs, America will invariably stick to its current cluster of painfully outdated strategic assumptions.

Read the entire column at World Politics Review.

12:17AM

What is eternal and ephemeral about China - and this modern world system we call globalization

Fabulous op-ed in WSJ on 6 July by Liu Junning, an "independent scholar in Beijing."

You should read it all.  Here are my favorite bits:

First, Liu speaks to the infatuation in the West for the alleged "Beijing consensus":

This view fundamentally misunderstands the country's growth progress. China has indeed made great strides since 1978's "Reform and Opening" in alleviating poverty, opening up to the world, and making slow steps down the road of legal reform. Yet on closer inspection, the most significant transformations from the perspective of boosting prosperity have involved loosening of control over the people, not some alchemy of power and Marxism.

This becomes clear in comparing China's economic performance during periods when Beijing has been more closely versus less closely following the Beijing Model. According to MIT economist Yasheng Huang, "[W]hen measured by factors that directly track the living standards of the average Chinese person, China has performed the best when it pursued liberalizing, market-oriented economic reforms, as well as conducted modest political reform, and moved away from statist policies."

I have read such analyses too many times to count, and yet it still amazes me how many don't get it: China does best when it moves in the direction of the allegedly discredited Washington consensus and does significantly less well when it goes more statist.  But the mythology (like Reagan "reducing the size of government") lives on.

Liu also dismisses the notion that defenders of Chinese authoritarianism make: that the Chinese naturally abhor Western-style rights:

This too is at odds with current experience. Simply talk to those peasants who have had their land arbitrarily taken, and we see that property rights are implicitly cherished by all, regardless of race or ethnicity. Despite Beijing's crackdown, lawyers and activists continue to press for Western-style rights.

The rest of the piece is a tour of Chinese history that shows that the ideas and practices of liberalism have flowered throughout. Again, Mao gets credit for reunification but also for perverting the system profoundly. China has always been far more capitalistic than realized. It was Mao's 30-year rule that was the historical aberration, as was his erratic authoritarianism.

Then the solid finish:

To say that the narrative of liberty vs. power is uniquely "Western" is to turn a blind eye to the struggles of those who have gone before us. Individual rights are not a Western development any more than paper and gunpowder are inventions that are uniquely Chinese. Is Marxism "German"? Is Buddhism "Indian"? Of course not. When ideas are born, they take flight into the world to be used, improved or discarded by all of humanity. Constraints on political power and the protection of individual rights belong to all.

The tragedy is that we Chinese don't have full access to these protections. That increasingly will hold us back instead of propelling us forward as proponents of a Beijing consensus believe. Real success for China in the 21st century will depend not on the Communist Party itself, but on the establishment of the rule of law, limited government, and further economic liberalization that opens China's market to the world.

Fundamental to this is the right to speak freely. China will truly prosper only when individuals such as Liu Xiaobo, Ai Weiwei and the many other Chinese patriots who speak for reform are safe in the knowledge that they can do so without a late-night knock on the door from the government.

I continue to believe that the Chinese need a certain historical distance from the Cultural Revolution, plus time to get used to their new-found wealth/development before democracy arises naturally from within - meaning the popular push gets so strong that the Communist Party is forced to birth two or more successor parties in order for the system to survive.

I will readily admit that, until that tumultuous process unfolds, there will be plenty in the West who buy into the Beijing-sold notion that somehow the Chinese are "unique" in their history and developmental trajectory. I personally think that's nonsense.

I also think that the real genius of the American System projected onto a global stage these past seven decades as an international liberal trade order-cum-the West-cum-globalization is that it enables countries like China to start the developmental jump and continue it with enough force - via a package that remains far closer to the Washington consensus than any other I've seen - to trigger the pluralization process that best fits the society in question (aka, what we call "democracy" but really mean as a republic or a government based on law). The timing is variable but inevitable if economic success is had (show me the large rich country that is both politically mature and not a democracy).  Yes, in the era following the Cold War's end, we must suffer waiting out a host of countries and their evolutions, but as the Arab Spring shows, the people themselves will keep on trying - no matter the costs and frustrations.

To imagine democracy is on the wane in this era is, in my opinion, simply wrong-headed and stubbornly so. Ditto for free markets, understanding that we don't live in a world of pure or absolute anything and that these things ebb and wane with events.  

But the march of history is beyond clear, as is America's supremely positive impact on it these past seven decades.  Most of everything we consider to be good in this world has come about in the last seven or so decades.  Go back before them - before America's ascension to global power - and you find everything much worse and on the path of self-immolation. Instead, we now have unprecedented peace, wealth, development and freedom - especially for women. These are not accidental events; the timing is incontrovertibly linked to America's role.

Which is why maintaining that role in a sustainable fashion is so crucial. "Post-American" is a self-defeating lie - a cancer within our ability to think in grand strategic terms. There is most definitely a "pre-American" world. There will never be a "post-American" one - nor should there be in a world that will be ruled by the middle - again, thanks to the system we created, nurtured and defended all these years.

11:26AM

Insensitive yes, but Geronimo reference is historically apt

From the AP on Yahoo news:

WASHINGTON – The top staffer for the Senate Indian Affairs Committee is objecting to the U.S. military's use of the code name "Geronimo" for Osama bin Laden during the raid that killed the al-Qaida leader.

Geronimo was an Apache leader in the 19th century who spent many years fighting the Mexican and U.S. armies until his surrender in 1886.

Loretta Tuell, staff director and chief counsel for the Senate Indian Affairs Committee, said Tuesday it was inappropriate to link Geronimo, whom she called "one of the greatest Native American heroes," with one of the most hated enemies of the United States.

"These inappropriate uses of Native American icons and cultures are prevalent throughout our society, and the impacts to Native and non-Native children are devastating," Tuell said.

This is what I said in Esquire's The Politics Blog yesterday:

It's become a drones-without-borders world, befitting the frontier-integrating age we live in. Think of the American West after the Civil War and how we spent years hunting down all the Native American "insurgents" who popped up over the decades. Bin Laden goes down just like a Crazy Horse or Geronimo — a grubby end to a mythical warrior figure. But the larger process goes on, even as the Chinese drive most of of globalization's advance in that part of the world. But, yes, we'll keep hunting them down. That's what bureaucracies do, and that's why the lone-wolf resistance always loses in the end.

I saw comments that indicated that people were offended by my Crazy Horse reference.  The Senate staffer takes similar umbrage at the US military referencing Geronimo.

Yes, now, we cast these figures in better lights, but at the time they were considered blood-thirsty killers who preyed on Americans, which, of course, they were and did - whatever the post-dated nobility of their motives.

But my larger point, and I think the military's larger point, is the similarity of the process.  The US military hunted Geronimo for many years.  With Crazy Horse, it was a sad and grubby end to a warrior's life, getting shot while surrendering at a US government post (I've been to the historical site).

In their time, these guys were magnificent insurgents who brutally murdered in a fashion designed to incite terror.  They were fighting for their way of life - and they doomed in the same way that Bin Laden was.  The process of frontier integration was too powerful and too vast and they could not adjust.  Back then it was the westward expansion of the US - a microcosm of today's globalization expansion.

12:02AM

WPR's The New Rules: U.S. Global Role Depends on Hard Fiscal Choices

Much of the global perception of America's long-term decline as the world's sole surviving superpower is in fact driven by our fiscal decline. That's why I was disturbed to hear Democrats so quickly dismiss GOP Sen. Paul Ryan's bold, if flawed, federal budget proposal on the grounds that it would "end Medicare as we know it."  Frankly, arresting our decline means ending a lot of things "as we know them." That's simply what being on an unsustainable path forces you to do.

Read the entire column at World Politics Review.

11:17AM

Eurasia Group's Ian Bremmer and David Gordon cite top geo-pol risks for 2011

David Gordon is an old friend, who, as the National Intelligence Officer for economics and globalization in the National Intelligence Council, came to most of my wargames at the Naval War College and World Trade Center in NYC.  He later became Vice Chair of the NIC and then head of policy and planning at State in the final Bush years (when diplomacy made quite the comeback).  One of the smartest guys I know and just a great guy all around.  After Bush ended, he left government and went to direct research at Ian Bremmer's Eurasia Group, which specializes in political risk consulting.

Ian, you know from his books ("J Curve," "Fat Tail," "End of the Free Market"), all of which have made it into my own books or columns.  Ian and I did a back-and-forth on his "The Call" blog at Foreign Policy regarding the last one.  Ian is deservedly recognized as THE political risk guru out there (he often writes with Nouriel Roubini) and he's done an amazing job of building up Eurasia Group from nothing in just over a dozen years.  Having worked with Steve DeAngelis is building up Enterra Solutions over the past 6 years, I truly appreciate what that takes.  

I've been working for Dave and Ian since January as a consultant on a project for the government that's been a lot of fun and there are others in the hopper, so this is turning out to be a nice working relationship in addition to my other affiliations.  I've missed working for the USG these past few years, so it's been great to get back to that sort of analysis.

The top ten risks cited will also sound familiar enough to readers of this blog.  Here's the opening, plus the list as links to the report:

The risks that exercise us most usually center on a country, an issue, an event. We worry over political chaos before or after an election, a coup in a fragile regime, or military conflict with a rogue nation. But for the first time since we've been writing, the political risk environment is much broader this year. It's the change in the world order itself that gives us most cause for concern.

Two years after the financial crisis, there's a strong argument to be made for optimism. The American economy is poised for (at least modest) growth and emerging markets are still churning ahead. By that logic, it's high time for governments, captains of industry, banks, and citizens to get back to business. Time to leave behind record gold prices and put the trillions of dollars sitting on the sidelines back to work.

But that conclusion implies a level of confidence, if not quite comfort, with where the world is headed. Whatever your expected shape of economic recovery—a U-curve, V-curve, L-curve, or something else—we're entering an entirely new world order. That means new ways for states to relate with one another both politically and economically. It means new areas of conflict. 2011 looks to be the year that our understanding of how the world works becomes out of date.

This is scary not because it's incomprehensible but because the scale of change is so great that it becomes difficult to manage. Few of us have experienced a transition of this scope. Following the collapse of the Soviet Union two decades ago, it was fashionable, briefly, to herald a new world order. The pronouncements were premature. Soviet collapse remade the global security balance, but its economic impact was considerably more modest. The advanced industrialized economies had ruled the global economic system; the end of the cold war meant a move from the G7 to the "G7 plus one." Globalization sped up a bit, the West had new countries to invest in (at least for a while), and some of the old ones (Germany) got stronger. "Plus one" didn't imply a new world order.

That's not true today. After the financial crisis, the G7 was replaced by the G20. This change brought no challenge to America's global military supremacy. But the rules of the economic road are a different story and the new geopolitical order is shaped not by a military balance but by an economic one. This new world order marks the end of a decades-long agreement on how the global economy should function. This is world-changing indeed, because the dominant economic trend of the last half century, globalization, now faces a direct challenge from geopolitics.


The rise of this new order will have a profound impact on nearly all of the world's big-picture, long-term trends. A lack of coordinated governance on key economic issues will become entrenched and give rise to lasting international conflict. States and corporations will become more closely aligned in both developed and developing states. Most significantly, we'll see a shift in the highest levels of global conflict to the region where globalization and geopolitics collide with greatest force: for the past twenty years, the sharpest geopolitical tensions were to be found in the Middle East; we'll now see a decisive and long-term shift of those tensions to Asia.

All the risks we're looking at in 2011—conflict from the North Korean succession process, the unwillingness of China to budge under international pressure, the lack of political and economic coordination in Europe, currency controls intensifying global economic misalignment, the geopolitics of cybersecurity—are intensified by this transition to a new world order. The red herrings on our list avoid risk in spite of it.

Surprisingly, and despite all the anxiety these changes have created, there's no name for this new era. We propose the G-Zero. This is the lens through which we'll understand global events in the coming years. It's our top risk for 2011.

THE RISKS

1 The G-Zero
2 Europe
3 Cybersecurity and geopolitics
4 China
5 North Korea
6 Capital controls
7 US gridlock
8 Pakistan
9 Mexico
10 Emerging markets
*Red herrings

Being Mr. Counterintuitive, I like the "red herrings" the best. They are Iran, Turkey, Sudan and Nigeria. I like the optimism on each.

10:31AM

WPR's The New Rules: The State Strikes Back

The rampant globalization meme of the 1990s was that the state would wither away, leaving nonstate actors to rule -- or ruin -- the world. The terror attacks of Sept. 11 seemed to confirm this notion, triggering all manner of academic fantasies that a proliferation of super-empowered individuals would overwhelm the world's declining and failing states. But when globalization's alleged coup de grâce arrived in the form of the 2008 global financial crisis, not only did the world not slide into widespread conflict, as so many anti-globalization hysterics predicted, but the state made quite the comeback.

Read the entire column at World Politics Review.

10:02AM

WPR Feature: Managing Global Supply Chains a Key U.S. Advantage

co-authored with Stephen F. DeAngelis

While many in the West fret over the challenge of "rebalancing" the global economy after the recent global financial crisis, several trends suggest that the field of supply chain management could offer a key advantage for an America eager to double its exports by 2014. On the surface, supply chain management might not sound too sexy, but understand this: In today's globalization, neither companies nor countries compete -- supply chains do. Companies like Wal-Mart have known this for some time. Thus, positioning America to be the world's pre-eminent provider of secure, transparent and efficient supply chains will ensure that our economy masters globalization's competitive landscape in the fullest sense. 

Read the entire column at World Politics Review.

See also Steve's broader post on transforming global supply chains.

11:03AM

The larger WPR special feature: The DNA of Global Power

Find it here for sale.
Nostalgic for me to appear with Professor Nye.  He was on my PhD committee with Adam Ulam and Houchang Chehabi.